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How to Start a Business in Dubai

It’s no secret that Dubai offers business owners countless benefits, the biggest ones being 0% income tax and a central, strategic location. If you are curious about how to start a business in Dubai, Virtuzone uses a time-tested process to get your idea to market as soon as possible

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Everything You Need to Know About How to Start a Business in Dubai

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The process of starting a business in Dubai is actually quite straightforward. There are some things to watch out for though. It can be tedious and time-consuming with multiple steps and important considerations along the way that you should know about. 

Whether you decide to undertake the process yourself or hire business setup experts to fast-track your setup, make sure that you get good advice about the implications of your decisions. After helping over 60,000 entrepreneurs get started in business, we have put together the ultimate roadmap for how to start a business in Dubai. 

How to start a business in Dubai

Why start a business in Dubai?

Dubai and the UAE are incredibly welcoming and supportive business environments. In fact, over 20,000 new businesses launched in Dubai last year alone. Not surprisingly, many of these were registered by overseas entrepreneurs. Somewhere between 80% and 90% of the UAE workforce are foreign nationals.

There are many compelling reasons why thousands of entrepreneurs the world over flock to the UAE and Dubai to start a business. The main benefits are:

  • Low tax: The UAE proudly boasts 0% tax on both personal and corporate incomes. The only significant tax to be aware of here in the Emirates is VAT – introduced in January 2018 – which stands at a flat 5%.
  • Vibrant economy: The Emirates is home to the second largest economy in the Arab world. With a GDP of around AED 692bn, it sits behind only Saudi Arabia. It is equally diverse as it is large. You can start a business in numerous industries, from healthcare and hospitality to technology and trade. 
  • Great quality of life: The UAE placed 23rd in the Best Countries Index, only slightly behind Spain and Ireland and ahead of Portugal and Greece.
  • Startup support: The Emirates is home to many startup incubators and funding initiatives designed to accelerate business growth. 

The future of business in Dubai is looking very bright too. According to the International Monetary Fund (IMF), the UAE is expected to lead economic growth in the Arabian Gulf this year, increasing by 2.5%. This is significantly ahead of the region’s biggest economy, Saudi Arabia, which is forecast to grow by 0.4%.

If this makes you curious about how to start a business in Dubai, you aren’t alone. The good news is that company formation in Dubai does not need to be difficult if you follow the steps in this guide.

How to start a business in Dubai

How to start a business in Dubai – The Company Formation Process

1. Choose an industry

There are many industries in the UAE and plenty of opportunities for innovation. You might be tempted to jump ahead to the actual setup process straight away, however, we recommend that you decide on the nature of your business up front

In Dubai and the UAE, many locations only permit specific business activities. Be careful not to start a business in Dubai, only to realize that you can’t operate in your chosen location! 

For example, certain free zone locations cater to specific activities or industries, such as media, finance or tech. Let’s take a look at Dubai Media City. As its name suggests, it is a free zone dedicated to media companies, or businesses operating media-related activities. Dubai Media City is home to globally renowned media companies, such as BBC, CNN and Thomson Reuters. Another example is Dubai International Financial Centre (DIFC), where large global financial services companies like Credit Suisse AG, Goldman Sachs International and Morgan Stanley have offices. 

Over the years, however, a number of sector-specific free zones have started to welcome general business activities, and not just the ones they are intended for.  

Restrictions aside, there are other reasons why you may want to set up in close proximity to businesses in the same sector as you. Look at transport links too. If your business relies heavily on import and export, you should consider one of the free zones situated near an airport or port.

There are numerous business sectors thriving in the UAE. In 2022 and beyond, the commitment to diversifying beyond the oil economy means that new businesses that contribute to this vision will be looked upon favourably.

2. Choose a location

Having settled on an industry, your next big decision is whether to launch in the mainland or in a free zone. If you opt to set up in a free zone, you’ll benefit from: 

  • 0% corporate and personal tax 
  • 100% company ownership 
  • 100% repatriation of capital and profits
  • No currency restrictions, and 
  • 100% import and export tax exemption

However, if you wish to trade directly with the local market in the UAE, you’ll need to work with a mainland company who will charge a fee.

On the other hand, if you choose to set up in the mainland, you are free to trade directly with the local and international markets. However, unless your business activity falls under professional services, you will need to work with a local partner who will hold 51% of your company’s shares. 

Virtuzone provides mainland businesses with a Local Corporate Nominee Shareholder who will act as their local partner. This way, the foreign business owners can retain 100% operational and financial control over their mainland company. 

3. Choose your company name

The UAE has some strict naming conventions, so before you commit to a company name, make sure it is legally acceptable. 

Any names that include offensive language are forbidden, as are any company names that refer to Allah, Him or any other religious, sectarian or political groups such as the FBI or Mafia. If you choose to name your business after a person, that person must be a partner or owner of the company and their full name must be used – no initials or abbreviations.

For a full rundown of how to choose a company name, visit this guide.

4. Complete the incorporation paperwork

When considering how to start a business in Dubai, if you have made it this far, you are now past the most crucial decisions. At this stage, you will want to deal with the appropriate paperwork. 

You will be required to complete an application for your chosen company name and activity, to be provided along with copies of shareholders’ passports to the relevant government authorities. Some free zones will require additional documentation, such as a business plan or Non-Objection Certificate (NOC) – a letter from a current sponsor confirming that you are allowed to set up another business in the UAE. 

When you come to register your company in the UAE, you have to complete an application to register your chosen company name and activity, along with copies of shareholders’ passports.

Mainland companies will be required to meet certain capital requirements, which must be stated in a Memorandum of Association. 

Checking and submitting your paperwork

You need to contact the Department of Economic Development of your chosen emirate to register your business activity and trade name and then submit the required documentation. You can find links to the respective offices on the UAE government website, under Information and Services.

Once your application has been processed, you will be issued with your company licence. 

Navigating the paperwork at this stage is perhaps the most arduous task you will have to tackle. While it might take you weeks to months to adequately understand and complete this stage of the process, assistance from Virtuzone at this stage of the process is often invaluable. For anyone who is averse to monotonous, difficult paperwork with lots of fine details, we strongly recommend that you utilise our expertise. The money and time saved during this phase alone more than pays for itself. 

5. Apply for a licence

Once your application has been processed, the government will issue you with your company licence. Regardless of setup location, you’ll usually only require a few standard documents: a completed application form, shareholder passport copies and the like. Some free zones may also require you to provide a business plan.

6. Open a bank account

Once your paperwork has been returned, you will have all the documentation you need to open your corporate bank account. The UAE is home to many banks, both local and international, including;

There are also global names such as HSBC, Citibank and Barclays. Choosing the one that’s right for you will depend on your specific requirements. 

You will need a bank account before you can begin trading in the UAE. 

How to open a UAE business bank account

It generally takes between two to four weeks to open a bank account in the UAE. The bank will want to know: 

  • Your primary business areas
  • Your anticipated volume of currency
  • Total deposits 
  • Revenue levels and 
  • Your main customers and suppliers

Once your paperwork has been returned from the government you will have all the documentation you need to approach the bank of your choice. 

7. Apply for a visa

Congratulations on making it this far! Applying for a visa is the final step on how to start a business in Dubai. As well as applying for your own visa, many free zones allow you to put in applications for staff and dependants. The exact number you can submit will depend on which free zone you choose to set up in. 

If you are looking to obtain visas for a spouse, child, maid or driver, it is best to seek expert advice to ensure that, firstly, it is possible to do so in your chosen free zone, and secondly, that both you and anyone you are hoping to sponsor for a visa meet all of the entry criteria.

Assuming that this all checks out, the process is made up of four simple stages: 

  • Entry permit 
  • Status adjustment 
  • Medical fitness test
  • Emirates ID registration and visa stamping

There is no limit to the number of visas a mainland company can apply for, whereas free zone companies will have some restrictions, which vary from one free zone to another.

That’s it! With these eight steps completed, you’re ready to start your business in Dubai!

Let’s do business!

Once you have completed these steps, you will be ready to start trading. Compared to other parts of the world, setting up a company in the UAE is very straightforward – ranked 16th in the world in the latest World Bank Ease of Doing Business rankings.

Mainland company formation in Dubai

How to start a business in Dubai: Etiquette in the UAE

Now that you know how to start a business in Dubai, it makes sense we should take a moment to examine some of the avoidable pitfalls of doing business in this complex, multicultural and fast-moving environment.

DO: Dress right, play nice and smile

Yes, Dubai residents love their brands but it should also be noted that people here have also become very savvy about subtlety and sophistication. And while Dubai is very Western in some regards, it has strong Islamic roots. Add these factors together and it’s clear that whether you’re male or female, being smart, stylish and modest in your dress is a must. For example, a suit and tie is more or less compulsory for men attending meetings, especially if you’re in the process of looking for a local sponsor.

Happy, positive energy is also a major characteristic of social, entrepreneurial and even corporate trends in Dubai. No one moves here to immerse themselves in gloom. So top your outfit off with a smile.

When learning how to start a business in Dubai, it’s important to understand how to deal with local Emiratis. Firstly, you should know that it is customary to treat any introductions in meetings with utmost respect. You might not immediately know the ranks of the people in the meeting room so best be aware of etiquette when it comes to addressing people and social interaction: For example, never shake hands with the opposite gender unless they extend their hand first, and always use your right hand.

Finally, don’t dive too quickly into business matters. While you may be in a hurry, spending some time to enquire about a person’s day, health, and family will pay dividends. A good tip is to wait for the other party to start the business chat and keep any European corporate bluntness at bay. Small talk is more than just courtesy; it’s a non-intrusive way of finding out whether someone would be a suitable business partner.

DON’T: Boast about your achievements

Dubai has become crowded with show-offs who claim to have the first, the best, the only, the biggest, the wildest. Don’t add to the noise.

The city is now leaning towards modern minimalism, clean design and elements rooted in taste and humility, and quality over quantity. So when disseminating any business collateral – from pamphlets to online event invites – try to market yourself without using overused Dubai clichés. 

DO: Get out there

When starting a business, you will not get very far with simple email introductions and online transactions. 

Dubai is all about in-person networking events and meet-and-greets. Go to them, enjoy the cocktails, talk to anyone in the room and stay in touch afterwards. It’s a small network within each particular industry so close personal relations are key.

Word-of-mouth is also very strong here and making as many positive contacts as possible is key to expanding both your skills and client base. So join groups, networking sessions, conferences and always have a business card handy – with an Arabic language side printed as well. 

DON’T: Expect meetings and negotiations to go as planned

Patience is the most valuable virtue you can build throughout your life and work in the region. Lengthy group meetings can be somewhat chaotic at times: People will often check their phones during discussions, join unannounced and proceed to alter the conversation, or simply show up late.

While this may at times feel frustrating if you’re coming from a European or North American business environment, being patient (and remembering that punctuality is still expected of most expats) will serve you well. Don’t forget that keeping business in the family is a way of life here, so that may also change the dynamic of your dealings with companies, as well as the speed and style of their decision-making. 

DO: Explore the culture and immerse yourself in new traditions

Get into the heat, learn to live with it and embrace its many positive aspects. Complaining about the heat (which can become very intense at 45 degrees Celsius in the summer) is of no use to anyone. It is a desert after all… but this also means breezy nights in epic landscapes, dune bashing and a whole host of other activities to enjoy.

Find out about the region, show interest in the well-being of local populations, and try to learn a few words in Arabic – it is always appreciated.

Conclusion: How to start a Business in Dubai

With a flourishing business landscape helped by government incentives and an ease of setting up new enterprises, the city of Dubai is an appealing challenge for the business-minded dreamer. Dubai has its contradictions and relatively new social paradigms, but the country’s hospitality and progressive forward-thinking strategies reward those with ambition.

Whatever stage you are on during your Dubai journey, taking these points into consideration will help smooth the transition – although engaging with professional advice throughout the process is of course vital.

In the end, Dubai is a city with an unmatched “You can do it” attitude. So with that in mind, it’s over to you.